Wow, all that and it didn’t even answer the question posed. The retail customer purchased 5315 shares of JBII it is very likely, but not certain, they were marked short. However unless one works at FINRA and has access to the NON TAPE TRANSACTION reports there isn’t any way to know for certain that it was that specific trade. Many trades are displayed as one single trade on the consolidated tape, and 5 is a common occurrence. But it is a good guess that trade was in fact part of the Daily Reg SHO and many will assume, including myself, that it was in fact marked short.
The retail customer placed an order with their broker for 5315 JBII shares on the OTC Market, a two tier marketplace. On the first tier are Brokers and the second tier are Broker Dealers, each having access to different liquidity but the Broker Dealers have more depth in their access to liquidity in this quotation market. The broker in this case could not execute the order for the customer within their own tier, so like all Brokers they sent the order to their contracted Broker Dealer who has access to more market depth. Now the Broker Dealer (MM) has the order and also has a seller, so the MM sells 5315 shares to the retail customer on the INITIAL LEG of the transaction, this gets reported to the consolidated tape and is MARKED short for the Daily Reg SHO. SEC Rule 200 requires any transaction in which a party that doesn’t own the shares sold in the transaction to be marked short, although it is a LONG POSITION transaction.
Now the MM buys the shares on a separate leg within seconds, of the very same trade transaction from the customer who is selling the 5315 shares and that is reported in a Non Tape Transaction report to FINRA to avoid duplicating volume reported. These “Riskless Principle” transactions make up the almost all of the Daily Reg SHO data presented and is in fact MEANINGLESS. It has been stated by FINRA that the data is in fact meaningless and they cite the two tier market and the use of riskless principle transactions as to the high numbers often seen in the reports. As like any regulator including the SEC, they state that nothing can be determined from the information presented in its raw state.
Further L2 provides minimal market depth, as it has been discussed multiple times, limit orders have exceptions for display, and certainly not "all" orders are presented to the user of such a trading tool. The "detailed" report provided here is complete nonsense and trash and is strictly for "amusement" purposes.
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